You have a new contract in place in your company. Why does it need to be managed? Does the contract itself not state everything that needs to be completed within the contract?
Human memory, differing drivers and lack of ability to include every possible scenario within the contract means that both the client and vendor may depart from the original objectives of the contract. This may mean that the objectives for entering into the contract may not be met.
There may be conflicting interests for example; vendors will look to maximise their return from the client while the clients will be seeking the most cost-effective solution. This need not occur and effective management of the contract can result in a win-win based scenario for both parties.
In a project setting, a project manager is assigned to achieve an ultimate goal; appointing a contract manager is no different. The sourcing team will have negotiated value and savings into the contract, the lawyers will have negotiated in hard fought for terms that are deemed important to the organisation. A contract manager like a project manager will ensure that the this value and terms are managed throughout the contract lifecycle.
Can your operational resources run it? Yes. Operational professionals can manage the contract but you need to keep in mind that they will also be concerned with keeping things up and running which may mean that commercial considerations may be forgotten or not seen as important. When you put a contract management professional in place they will ensure that the vendor and customer meets the aim of the contract including operational objectives – they are to a contract what a project manager is to a project.
Lack of active management of a contract may mean that you may miss deadlines such options to extend or purchase services at a discount. Such oversights can have a high monetary cost to the organisation.
However you must consider practicality and take into account the complexity, size, value and importance to the organisation of the contract when determining the level of management to be applied.
In conclusion a contract should be seen as an investment and that investment requires day to day management. Failure to do this ensure may mean that you could ultimately cost your company.